Volkswagen echoes Tesla, seeks lower import tax on electric cars in India

Days after US-based electric vehicle manufacturer Tesla sought the Centre's intervention to reduce import duties on electric vehicles in India, world's second largest carmaker Volkswagen too has voiced similar demands now.

The German auto giant wants lower import duties, stable policies on taxation, long-term incentives as well as adequate EV charging network around the country before it plans to bring in electric cars from Volkswagen, Skoda and other brands in the group to India.

Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, said, "The market for EVs has to be big enough for investments to come in and for that we shouldn't be placing barriers." Boparai was quoted by news agency Reuters saying that a reduction of even 75 per cent of import duties on such vehicles will not pose a 'big threat' to domestic car manufacturers.

Fully-built imported cars, including electric vehicles, attract as high as 100% import duty in India. This not only causes the price of the vehicles go up by two-fold for Indian customers, but also leaves little margin for the carmakers too.

Recently, a Reuters report claimed that the Centre is going to consider a 40 per cent reduction in import duties on electric vehicles, which is in line with Tesla CEO Elon Musk's proposal.

Earlier this month, Elon Musk had tweeted that he is hoping for a 'temporary tariff relief for electric vehicles'. Musk had said that Tesla wants to launch its cars soon in India, but Indian 'import duties are the highest in the world by far of any large country!'

Musk's call for reduction in import duties has left the auto industry in India debating over its necessity and impact on push for local manufacturing. Hyundai and Mercedes-Benz echoed Tesla's view of reducing taxes. However, Tata Motors asked for equal treatment for Indian carmakers from the Centre. Ola Electric, which is all set to launch its first product in India, said emphasis should be more on promoting local manufacturing besides tax cuts.

Volkswagen has clarified that it is not against local manufacturing. Boparai wass quoted by Reuters saying, "But duty of 60% and 100% is prohibitively high at this juncture. Establishing EVs is a lot of hard work. Not really having a clear roadmap and not reducing duties will slow progress towards EVs - both adoption as well as manufacturing."

Volkswagen and Tesla are locked in a race to become the world's largest electric vehicle manufacturer in the next three years. Both have invested billions of dollars to remain on top of the EV business globally.

(With inputs from agencies)